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MS Legal Associates:
In India, trusts set up for the social causes and approved by the Income Tax Department get not only exemption from payment of tax but also the donors to such trusts can deduct the amount of donation to the trust from their taxable income. The legal framework in India recognizes activities including "relief of the poor, education, medical relief, preserving monuments and environment and the advancement of any other object of general public utility" as charitable purposes. Companies formed under Section 8 of the Companies Act, 2013 for promoting charity also receive benefits under law including exemption from various procedural provisions of the Companies Act, either fully or in part, and are also entitled to such other exemptions that the Central Government may accord through its orders.
A trust is an agreement between people (called trustees) to manage property over which they have control either to benefit other people (called beneficiaries) or for charitable purposes. A groups of trustees may be incorporated as a board under the Charitable Trusts Act 1957 if the objects are charitable.
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust. In this article, we look at the procedure for forming a Charitable Trust in India.
Charitable Trust in India:
The person who reposes or declares the confidence is called the "Author of the Trust".
The person who accepts the confidence is called the "Trustee";.
The person for whose benefit the confidence is accepted is called the "Beneficiary".
The subject-matter of the trust is called "Trust Property" or "Trust Money".
The instrument if any, by which the Trust is declared is called the instrument of Trust or Trust Deed.
A Trust can be formed by words or act and there is no requirement for a Trust Deed. However, a Trust Deed is desirable and required in some cases. When a private Trust pertains to an immovable property a written and executed trust deed is essential and shall also required to be registered except where the Trust is created by a will. In case of public Trust for immovable property, a written Trust deed is not mandatory but desirable. In relation to Trusts for movable property (public or private), a simple delivery of possession with a direction that the property be held under Trust, is sufficient; it requires no document or registration.